Ebay VAT on used items

[paul2rep]

I found out recently that UK buyers are being charged VAT by ebay on used items posted within the UK, even though a used item posted within the UK is not liable to VAT under UK tax law.

It turns out that if a seller uses Ebays "simple delivery service" which includes "buyer protection", this is considered by UK tax office as a "service" and makes the whole transaction liable to VAT.

However if the seller doesn't use Ebays "simple delivery service" and posts the item themselves using royal mail/courier service, then the transaction is not liable to VAT if it is used and posted within the UK.

I would highly recommend that sellers do not use Ebays "simple delivery service" when posting used items within the UK so their customers don't get charged VAT.

[*vyolla*]

The VAT you're seeing is charged on the Buyer Protection fee and the Simple Delivery postage price.  These are both services. eBay is VAT registered so doesn't keep that VAT element but must collect it.

Private sellers must use eBay's Simple Delivery, only small low value items in certain categories may be exempt. 

[paul2rep]

So Ebay are providing a service, that no one can opt out of, which makes items in the UK that are not liable to VAT, now liable for VAT, but the good news is.....the service you can't opt out of, that negatively affects customers, also happens to make rbay money.......

[papso22]

No you don't understand. 

It's not the item that has VAT on.  It's the service, or services, provided by ebay that are subject to VAT.

[paul2rep]

Yes i do understand, Ebay is providing a service you can't opt out of, that service is liable for VAT, this means that if the seller didn't use the service, there would be no VAT for the buyer because the transaction is not liable for VAT, so ebay is providing a service you can't opt out of, which is costing customers VAT, ebay makes money out of the service, clear enough for you?

[papso22]

---

@paul2rep wrote:

.... which makes items in the UK that are not liable to VAT, now liable for VAT...... 

---

The bit above is what is wrong.

[papso22]

While there are instances where a private seller doesn't have to use simple delivery, and so there is no VAT on postage,  there will always be a buyer protection fee, which is chargeable to VAT, when buying from a private seller.  

Obviously ebay makes money out of the services they charge for, they are a business. 

[paul2rep]

How is it wrong?, if ebay didn't provide the "service", the transaction of a used item being sold and posted within the UK would not require any payment of VAT by the customer, you understand this, yes?

Ebay have added a "service" that either cannot be opted out of, or at very least is difficult not to use, you understand this, yes?

So a transaction that should not require the buyer to pay any VAT in the UK, by adding the "compulsory service" now requires the buyer to pay VAT, all clear?

[papso22]

I agree that if ebay didn't provide a service to buyers  on which VAT was charged, then a buyer buying from a private account, or business account that was not VAT registered, wouldn't pay any VAT.

But, when they buy from a private seller, or non VAT registered business, they are not paying VAT on the goods, which is what you said.

That is the mistake you made in the title of your thread and in subsequent posts.   A mistake that you now seem to be trying to wriggle out of by 'subtly' altering your original argument, a difficult thing to do when what you said is available for all to read.

[paul2rep]

"Subtly trying to wriggle out of it", no, i am trying to explain it to you without resorting to crayons....

The transaction (buying a used item within the UK and posted within the UK) is not liable for UK VAT to the UK buyer.

By adding the "compulsory service" the UK buyer now has to pay some VAT.

This means that if i buy a used item from a private seller within UK on ebay, as a buyer i now have to pay a VAT charge. 

A VAT charge i would not have to pay if ebay didn't provide/charge for the service.

Therefore if i buy a used item within the UK which is posted within the UK i now pay a VAT charge for that transaction.

I can't really work out how to explain this any simpler.

[papso22]

You are conflating a number of separate transactions (supplies) by different legal entities, in order to make some sort of point.

You pay VAT on any service provided by ebay, that is a transaction between you (as the buyer), and ebay.

You do not pay VAT on the goods sold to you by private or non VAT registered business sellers, that is a transaction between buyer and seller.

By the way it makes no difference if the item is used or new.  Whether VAT is charged depends on the VAT status of the seller.

A reminder of what you posted:

"I found out recently that UK buyers are being charged VAT by ebay on used items posted within the UK, even though a used item posted within the UK is not liable to VAT under UK tax law".

Buyers are not charged VAT by ebay on used items.  That is because used items can be subject to VAT and ebay doesn't sell items.  There is no VAT exemption for used items sold by a VAT registered business seller.  There is a second hand margin scheme but that is a VAT easement for accounting purposes, not a regulation that removes VAT being charged on the sale.

[tobiasd4]

It would be better if ebay just showed the fee including VAT, instead of breaking it down.

That way buyers would not get confused. 

[paul2rep]

It matters because A PRIVATE SALE OF A USED ITEM LOCATED AND POSTED WITHIN THE UK, legally does not incur a VAT charge to a UK buyer.

By adding the "compulsory service" the UK buyer now does incur a VAT charge.

Is it really that hard to understand?

By adding and now charging for a "compulsory service" the UK buyer now pays a VAT charge that they wouldn't pay if the "compulsory service" wasn't there, or if they didn't buy it on ebay.

[papso22]

Are you now accusing ebay of breaking the law?

As I have explained, a buyer will always legally pay some VAT to ebay when buying a second hand (or new) item from a private seller.  This is not VAT on the item, it's VAT on the buyer protection fee, a service provided by ebay.

If the seller is using Simple Delivery, there will be VAT on the buyer protection fee as well as VAT on the entirely separate transaction where ebay sells postage to the buyer.  In other words VAT on the postage.

If you believe either of these things is illegal, please provide your source.

[*vyolla*]

---

@paul2rep wrote:

It matters because A PRIVATE SALE OF A USED ITEM LOCATED AND POSTED WITHIN THE UK, legally does not incur a VAT charge to a UK buyer.

The VAT is not being charged on the item price, as explained more than a few times here it's charged on the Buyer Protection Fee and postage price which comes under services. eBay is VAT registered and must collect VAT on this service and pass it on to HMRC.

By adding the "compulsory service" the UK buyer now does incur a VAT charge.

Is it really that hard to understand?

By adding and now charging for a "compulsory service" the UK buyer now pays a VAT charge that they wouldn't pay if the "compulsory service" wasn't there, or if they didn't buy it on ebay.

If the 'compulsory service' wasn't there then buyers wouldn't pay a VAT charge because the service would be unavailable so they wouldn't be able to buy anything in the first place. If they bought it from a high street store then there would be no Buyer Protection or postage fee because they wouldn't be paying for either of those services. 

---

[tobiasd4]

When ebay charged private sellers a final value fee it included VAT. 

Often sellers passed this fee onto buyers by including it in start price or P&P.

What you need to do is look at total cost to buy an item, if it is too expensive, Don't buy!